Indian Oil Corp To Take Rs 4,200 Crore Hit Under GST Regime

State-owned oil refiner Indian Oil Corporation(IOC) has said that the impact of the goods and services tax (GST) would be nearly Rs 4,200 crore as it would not be able to claim input tax credit (ITC) for automotive fuels that fall outside GST. ITC allows an entity to reduce the tax on outputs by the same amount already paid as tax on inputs.

“We face the burden of dual tax compliance. First for non-auto fuels, which are under GST, and the second on auto fuels that are not under GST but the old VAT system,” IOC director (finance) A K Sharma said. He explained that for automotive fuels like petrol and diesel — which account for 60% of the business — the company was not able to claim ITC. “We are taking it up with the government. The permanent long-term solution is to bring everything under GST. That’s a bigger issue,” he said.

“Since there is a state GST component too on taxes, we are talking to state governments, asking them to allow us to use the ITC in some form. Denial of credit is enriching the state and central governments,” Sharma added. Read More…